Case Law Details
Marudhar Sewa Samiti Vs ITO (ITAT Ahmedabad)
Introduction: The ITAT Ahmedabad in Marudhar Sewa Samiti Vs ITO case, has ruled that voluntary contributions received towards the corpus of an unregistered trust under Section 12A are considered capital receipts, hence not taxable. The case offered new insights into the interpretation of tax liabilities for unregistered trusts.
Analysis: The appeal revolved around the core question of whether voluntary contributions received towards the corpus of an unregistered trust were taxable. According to ITAT, these contributions fall under the category of capital receipts, not income. Hence, they are not liable to taxation, irrespective of whether the trust is registered under Section 12AA or not. The ITAT leaned on the precedent set by the Serum Institute of India Research Foundation case, further solidifying this principle.
Conclusion: This ruling by ITAT is a significant step towards understanding the tax liabilities for unregistered trusts. It clarifies that contributions made towards the corpus of an unregistered trust are seen as capital receipts, not income, and hence are non-taxable. The implications of this judgment could potentially alter how trusts operate and manage their contributions in the future.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
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